Blossom Plaza is a $100 million residential and mixed-use development in the heart of Chinatown in Los Angeles, California. The project consists of 237 residential units, 18,500 SF of retail space, parking, and a pedestrian plaza connecting the Chinatown Gold Line station to Broadway.
Spire’s consultants assisted the owner by completing a cost review of the contractor’s Guaranteed Maximum Price (GMP) and Design Development (DD) estimates. The project included reviewing each line item’s scope, quantity, and price in the GMP and DD estimates. Our team also performed a conceptual level review of the contract, plans, specifications, and construction schedule. After confirming the quantities in the DD estimate, Spire compared pricing in the DD estimate to Spire-sourced pricing for projects of similar size, scale, location, and detail (in-house cost data, National Electrical Contractors Association [NECA], MCA, etc.). Spire was also responsible for generating a cost review spreadsheet and developing a Cost Review Report summarizing Spire’s analysis and findings.
Based on the analysis, Spire determined the contractor’s direct costs and total construction costs were 8% and 7% below Spire’s fair market estimate, respectively. Spire informed the client that the contractor’s estimate appeared competitive and a good value if the contractor delivered on the prices. Spire also provided the client with several risk mitigation strategies if the contractor was not able to achieve the GMP. Spire’s recommendations included:
- Review and discuss areas of the work identified by Spire as possibly underpriced
- Confirm with contractor that escalation rates are included in GMP
- Confirm with contractor that it included any additional costs associated with Los Angeles Housing Department (LAHD) requirements
- Clarify and document what is and is not covered by the 3% construction contingency
- Establish and maintain an owner contingency account
Spire provides engineering and construction risk management services by identifying and analyzing potential risks that may occur throughout the construction process. Spire’s construction management team performs risk assessments on construction projects to assist our clients in preventing and mitigating costly potential delays and disruptions.